The start of filming on the two $500 million Hobbit films -- prequels to The Lord of the Rings -- comes after setbacks that have included disputes over distribution rights to the films; financial difficulties of studios MGM and New Line; the departure of Guillermo Del Toro as director; industrial action brought about by N.Z. Actros Equity, which threatened to move the shoot from New Zealand; and Jackson's hospitalization in February for a perforated stomach ulcer.

Martin Freeman, who stars in the title role as Bilbo Baggins, joked about the so-called "curse of The Hobbit" last month: "There are some bits of bad luck associated with it [but] we're ready to go -- just as soon as 2015 comes around."

The company of 13 dwarves, Baggins and the wizard Gandalf (Ian McKellen) have been in Wellington for the last two months preparing for the films.

The Hobbit, to be made as two 3D films, follows the journey of Baggins, who is swept into an epic quest to reclaim the lost Dwarf Kingdom of Erebor, which was conquered by the dragon Smaug. Approached out of the blue by the wizard Gandalf the Grey, Bilbo finds himself joining a company of 13 dwarves led by the legendary warrior Thorin Oakensheild. Their journey will take them into the Wild; through treacherous lands swarming with Goblins and Orcs, deadly Wargs and Giant Spiders, Shapeshifters and Sorcerers and ultimately Baggins' meeting with Gollum, where he gains possession of Gollum's "precious" ring -- the simple, gold ring that is tied to the fate of all Middle-Earth.

Warner Bros. on Monday confirmed that Cate Blanchett (Galadriel), Andy Serkis (Gollum) and Elijah Wood (Frodo) will reprise their roles from Lord of the Rings. N.Z. actors Jeffrey Thomas and Mike Mizrahi also join the cast as Dwarf Kings Thror and Thrain, respectively.

Filming, under the eye of director of photography Andrew Lesnie, will take place at Wellington Stone Street Studios, the village of Matamata and at other undisclosed locations around New Zealand.

The two films are said to be worth more than $1 billion to the N.Z. economy. The New Zealand government is providing incentives and tax breaks worth around $100 million to the shoot.

Also working on the films are production designer Dan Hennah, conceptual designers Alan Lee and John Howe, composer Howard Shore and makeup and hair designer Peter King. Costumes are designed by Ann Maskrey and Richard Taylor.

Taylor is also overseeing the design and production of weaponry, armor and prosthetics, which are once again being made by Weta Workshop. Weta Digital takes on the visual effects for both films, led by the film's visual effects supervisor, Joe Letteri. Postproduction will take place at Park Road Post Production in Wellington.

The Hobbit is produced by Jackson and Fran Walsh, alongside Carolynne Cunningham. Executive producers are Ken Kamins and Zane Weiner, with Philippa Boyens as co-producer.

The Hobbit films are co-produced by New Line Cinema and MGM, with New Line managing production. Warner Bros. Pictures is handling worldwide theatrical distribution, with select international territories as well as all international television licensing being handled by MGM.

The two films are planned for release in late 2012 and 2013, respectively.